More than a third of Australians seeking hardship assistance from banks have given up due to complicated applications processes.
An Australian Securities & Investments Commission (ASIC) report also found that 40 percent of customers who received assistance through reduction or deferral of payments, fell into arrears right after the assistance period ended.
ASIC Chair Joe Longo said the report, Hardship, hard to get help: Lenders fall short in financial hardship support, outlined findings from ASIC’s review of 10 large home lenders.
“The review found they should be doing more to support Australians who were struggling to meet their repayments,” Mr Longo said.
“In the worst cases, lenders ignored hardship notices, effectively abandoning customers who needed their support.
“For people who reach out to their lender to signal they need support, this can be devastating. Too many Australians in financial hardship are finding it hard to get help from their lenders and it’s time for meaningful improvement,” Mr Longo said.
He said ASIC spelt out in a letter to the CEOs of lenders last year that they needed to meet their obligations to customers experiencing financial hardship.
“This report highlights lenders must improve the way they deal with customers experiencing hardship. What we have seen is simply not good enough – struggling customers deserve the right support in their time of need.”
He said the report highlighted failures of lenders to identify customers in financial stress, the use of ‘cookie-cutter’ approaches to dealing with hardship requests, as well as onerous assessment and approval processes.
ASIC advises that under section 72 of the National Credit Code, if a consumer notifies their lender that they are or will be unable to meet their credit obligations, lenders must consider varying the customer’s credit contract and advise them of the decision within specified timeframes.
Variations to the credit contract can include payment deferrals, reduced payment arrangements, interest-only periods, term extensions, capitalisation of arrears or interest-rate reductions.
ASIC also advises consumers experiencing financial hardship to talk to their lender as soon as possible and request assistance and if they are unhappy with the service received or their lender’s decision, they should make a complaint to their lender in the first instance.
If they are still not happy with the lender’s response, they can contact the Australian Financial Complaints Authority.
